credit investor presentation - air liquide...2017/09/06 · • in 2016, the committed amount of...

Air Liquide supporting Energy Observer,

first Hydrogen vessel around the world

Credit Investor Presentation Robust Balance Sheet and Strong Cash Flow Growth

7 September 2017

The world leader in gases, technologies and services for Industry and Health 7 September 2017 Credit Investor

Agenda

2

1 A Proven Business Model for Sustainability

2 H1 2017 Activity

• Improved Performance

• Pursued Investments

• Executing Mid-term Strategic Plan

3 Group Credit Profile

4 Appendix


A Proven Business Model for Sustainability

3


The World Leader in Gases, Technologies and Services For Industry & Health

4

Established in 1902

~ 65,000 Employees

80+ Countries Sales1

OIR margin1

3M+ Customers & patients

(1) Adjusted FY 2016 figures

~€20bn

16.1%

The world leader in gases, technologies and services for Industry and Health Credit Investor 7 September 2017

A Strong Business Model Electricity

Natural gas

Water

ESG(d)

Healthcare

Large Industries

Industrial Merchant

Electronics

Air Liquide Activities

Home healthcare

Patient

Filling

center

SMR(a)

ASU(b)

Filling center

On-site (c)

customer

Hospital

Bulk and Cylinder

Customer

Metal

Producer

Refinery

Chemical

Producer ESG(d)

Filling center

Electronics

Customer

ASU(b)

Mutualize assets

Liquefaction piggyback

Distributors, bolt-on acquisitions

1

2

3

(a) SMR: Hydrogen and carbon monoxide production unit (Steam Methane Reformer) (b) ASU: Air gases production unit (Air Separation Unit) (c) On-site: Small local production unit (d) ESG: Electronic Specialty Gases

5


6

Relying on a Re-balanced Business Mix

H1 2017 G&S Revenue

of Group Revenue

97%


Air Liquide Ambition

7

Lead our industry

Deliver long-term performance

Contribute to sustainability


Strategy: a Customer-Centric Transformation

Operational Excellence

Selective Investments

Open Innovation

Network Organization

Profitable Growth over the Long-term

o Aligned with Air Liquide new business profile

o Customer experience o Cost competitiveness

o Core o Disruptive

o Digital workplace o Speed o Best practices

For

8


Financial Objectives

(1) Including Airgas scope effect in 2017 contributing +2% to the CAGR (2) Over the 2017-2020 period

+6% to +8%

CAGR 2016-2020(1)

>10% after 5-6 years

Efficiencies >€300m on average/year(2)

+ Airgas synergies >$300m

Maintain “A” range rating

Capex/Sales 2017-2020: 10% to 12%

9


Corporate Sustainability Objectives

10

• Help customers lower GHG* emissions

• Grow with reduced carbon intensity

• Continue to improve Safety • Do business responsibly • Extend Air Liquide Foundation

• Foster clean mobility

• Develop Healthcare

*GreenHouse Gas

For better environment For better health e.g.

e.g.

e.g.


0,0

0,5

1,0

1,5

2,0

2,5

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

0

1

2

3

4

5

6

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Regular and Sustained Performance

0

3 000

6 000

9 000

12 000

15 000

18 000

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

0

500

1 000

1 500

2 000

2 500

3 000

3 500

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Revenue (in €m) EPS(1) (in €)

Cashflow (in €m)

(1) Adjusted for the 2-for-1 share split in 2007, for attribution of free shares and for a factor of 0.974 reflecting the value of the rights of the capital increase completed in October 2016. (2) Calculated according to prevailing accounting rules over 30 years.

Dividend(1) (in € per share)

11

CAGR over 30 years(2)

+6.0%


+7.2%


+6.9%


+8.2%


H1 2017 Improved Performance

12


Strengthening Performance, IM Recovering

H1 2017 Group sales up +28.4% as published

• +2.8% G&S comparable growth to adjusted H1 2016*

• IM recovering at +3.1% in Q2, higher daily sales

+70 bps OIR margin improvement excluding energy

Delivering efficiencies & synergies

Strong Cash Flow growth

*Refer to appendix for definitions

13


Confirmed Improvement in G&S

14

Refer to appendix for definitions


Better Economic Indicators and End Markets

Industrial Production Year on Year in % (3-month rolling average)

15

Food &

Pharma

Materials &

Energy

Automotive &

Manufacturing

Technology &

Research

Professionals

& Distributors

2016 vs. 2015

2017 vs. 2016

+1.3%


Multiple Growth Drivers in H1 2017


LARGE INDUSTRIES

NORTH AMERICA

INDUSTRIAL MERCHANT WORLDWIDE

HEALTHCARE DEVELOPING ECONOMIES

ELECTRONICS GREATER

CHINA

+17%

+16%

+18%

+3% +7%

GLOBAL MARKETS & TECHNOLOGIES

16


Q2 - IM Recovering in North America and Europe

AMERICAS H1 2017

€4,251m

EUROPE H1 2017

€3,371m

Robust North America

• LI: record volumes for air gases, lower CoGen, several turnarounds

• IM: recovering in US & Canada

• EL: growing gas sales, lower E&I

• Strong HHC: South America and Canada

• LI: better volumes; stoppage in Ukraine

• IM: stronger daily sales, volumes up in bulk and cylinders, stabilized pricing

• Sound HC with low bolt-on M&A

Improved underlying activity,

less working days

G&S Comparable Sales Growth

As published

+95%

17


Q2 - Solid Asia, Stronger Middle-East

Improved IM and EL

• LI: maintenance turnarounds in China

• IM: very strong bulk and cylinder volumes in China, improving Japan

• EL: growth >+10% excluding E&I, very dynamic Greater China

Yanbu driving performance

• Yanbu (KSA) running at full capacity

• Dynamic activity in Egypt

• Strong HC in South Africa

ASIA-PACIFIC H1 2017

€2,032m

MIDDLE-EAST & AFRICA

H1 2017

€324m


18


Improved OIR Margin

NB: 2016 figures have been restated to account for IFRS 5, discontinued operations.

19


Efficiencies Aligned with NEOS

€148m

H1 Efficiencies Cumulative Efficiencies

2020

2019

2018

2017

June 30

€1,200m

€600m

€900m

€300m

€148m

20


Revenue Synergies

Cumulated Synergies Since Merger = US$138m

CYLI ND ER

OPERATIONS

• Implemented >90%

• 19 site closures

BULK

OPERATIONS

• Next major step in Q4 2017: merger of logistic optimization systems

PROCESS

&

PROCUREMENT

• Best practices under deployment

• Sourcing contracts renegotiated at maturity

BACK

OFFI CE

• Implemented >90%

• Elimination of duplicate corporate services

Cost Synergies

REVENUE

• Cross-selling

• Small on-site generators

• Large US customers in Mexico

Cumulative Synergies

June 30

2016

2018

2017

2019

$45m

+$175m

+$300m

+$235m

$138m

21


Net Profit Up +14.5%

NB: 2016 figures have been restated to account for IFRS 5, discontinued operations.

H1 2016 earnings per share restated for the impact of the preferential subscription rights allocated to shareholders as part of the capital increase.

22

The world leader in gases, technologies and services for Industry and Health Credit Investor 7 September 2017 23

Pursued Investments


Stable Portfolio, Selective Decisions

Investment Opportunities(1)

12-month portfolio

H1 2017 Investment Decisions(1)

H1 2017 Start-up/ Ramp-up Sales Growth

Contribution

€71m €1.1bn €2.1bn

• Mainly small to medium size projects

• Only a few projects above €100m

• Long-term contracts in Belgium and Oman

• EL & IM contracts in China

• Continuing small bolt-on acquisitions (Airgas, China)

• Americas main region ~40%

• Asia ~33%

(1) See definitions in appendix

24


Start-Ups: Higher Sales Contribution in 2018

2017 2018

Q1 Q2 Q3 Q4 Q4

Sasol South Africa

OCI U.S.

Chinese Projects

Major LI Projects

Yearly Sales Contribution

Latin America Project

Fujian Shenyuan China

>€370m to €170m

€190m

Q3

Chinese Projects

25


Group Credit Profile

26


1,65 1,49 1,47 1,61 1,59 1,63 1,70

3,3

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

2009 2010 2011 2012 2013 2014 2015 2016

Net Debt Net Debt / EBITDA

Net Debt ratios under control

27

DEBT / EQUITY

63%

DEBT / EQUITY

55%

DEBT / EQUITY

53%

DEBT / EQUITY

58%

DEBT / EQUITY

56%

DEBT / EQUITY

53%

DEBT / EQUITY

57%

DEBT / EQUITY

90%

In €m

3,3x


Strong Cash Flow Growth

CASH FLOW +31%

Gearing(1)

151%

Gearing

90%

Gearing(1)

90%

(1) June 30 gearings adjusted for dividend seasonality; June 30 2017 gearing excluding Forex. (2) Including acquisitions, transactions with minority shareholders, net of divestitures. (3) Including share purchases and capital increases.

28


Reduced Cost of Debt As of 30 June 2017

29

Net debt by currency

EUR

32%

USD

50%

JPY

3%

RMB

6%

OTHERS

9%

Average cost of net debt

2,00%

3,00%

4,00%

5,00%

2008 2009 2010 2011 2012 2013 2014 2015 H1 16 2016 H1 17

-40bps 3.5%

3.1%


Financing Structure As of 30 June 2017

BANK DEBT

10%

PRIVATE PLACEMENTS

OTHERS(1)

COMMERCIAL PAPER

(1) Others: Finance leases and put options granted to minority shareholders.

Sources Fixed/variable rates

(gross debt)

FIXED RATE

86%

VARIABLE RATE

14%

BONDS

MARKET DEBT

90%

78%

9%

2% 1%

30


€4bn

Prudent Liquidity Management As of 30 June 2017

31

Group gross debt maturity profile Available liquidity

CASH AND CASH EQUIVALENT

22%

CONFIRMED CREDIT LINES

78%

In €m

• Holdings’ Confirmed Credit Lines are a mix of bilateral facilities and a €1.3bn Revolving Credit Facility.

• In 2016, the committed amount of bilateral facilities has been increased from €1.3bn to €1.8bn and maturities extended.


In €m

Diversified market debt well spread over time As of 30 June 2017

500

670547

1 000

500

984 1 000

500

150

600

1 000

100 117

457

300

351175

88

110

285

591

219

263

657876

6571 095

657

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 >2029

EMTN - ALFIN EMTN - ALSA USPP CNY Bond Airgas Senior Notes 144A


“A” Long Term Credit Rating Commitment

33

■ Long-term rating: A-

■ Short-term rating: A-2

■ Outlook: Stable on July 7, 2017

■ Rationale:

○ Excellent Business Risk as well as adequate Liquidity and a significant Financial Risk. “S&P places a strong emphasis on Air Liquide's earnings resilience and stable cash flow generation when analyzing its profitability and financial metrics. S&P views Air Liquide's profitability as less volatile than that of most specialty chemical companies”

○ The stable outlook reflects S&P‘s expectation that the company will report overall resilient performance and positive free operating cash flow generation, leading to adjusted FFO to debt of about 25% in the next three years.

■ Long-term rating: A3 (first long-term rating)

■ Short-term rating: P-2

■ Outlook: Stable on May 19, 2017

■ Rationale:

○ “Stable and predictable cash flow generation supported by high barriers to entry, the low exposure to cyclical end-markets, ongoing efficiency gains and the ability to pass on most of increased input costs to Large Industries and Bulk customers through price escalation clauses.”

○ “Combined credit metrics have weakened as a result of the closing of the Airgas acquisition, but will improve gradually to get back to levels more commensurate with the A3 rating by 2018. We also note the strong strategic rationale of the acquisition as it will increase Air Liquide's density in the US market, a key success factor in this industry.”


Conclusion One Year After Airgas Closing, Executing Mid-term Strategic Plan


Executing Mid-term Strategic Plan

Portfolio

● Operational merger

● First synergies delivered

● All entities aligned

● Customer centric

● G&S focus

35

2016 2017

Focus on

Growth and Performance


Appendix


Details: Adjusted Sales Used as a Comparison Basis (1/2)

(1) Excluding Air Liquide Welding and Aqua Lung (2) Excluding currency and energy price fluctuation impact

Airgas divestments

Published H1 16 (1)

Adjusted Air Liquide

H1 16

Airgas consolidated

As of

January 1st, 2016

Published H1 17

Comparable growth (2)

Published growth

A B C D

F

E

37


Details: Adjusted Sales Used as a Comparison Basis (2/2)

2016 comparable sales growth excluding currency, energy price fluctuation and Airgas impact Comparable sales growth for Americas for Q4 16, FY16 are estimated due to the merger of Airgas and Air Liquide US operations

A

B

Published H1 16 excluding Air Liquide

Welding and Aqua Lung

Published H1 16 Air Liquide sales excluding Air Liquide Welding and Aqua Lung (IFRS 5, discontinued operations)

Airgas consolidated - Airgas divestments

Adjusted Air Liquide sales

Published H1 17

Comparable growth

Published growth

D

C

F

E

Published H1 17 Air Liquide sales

2016 starting point: A B +

Published H1 16 Airgas sales with divestments fully completed as of January 1st, 2016

Growth between H1 16 adjusted Air Liquide sales and published H1 17 sales

D excluding change and energy versus

C

A versus D

Growth between published H1 16 Air Liquide sales, excluding Air Liquide Welding and Aqua Lung, and published H1 17 Air Liquide sales

38


H1 2017 G&S Revenue Step Change

Comparable growth

Published growth


+31.0%

In €m

+2.8%

+2.3% +1.8%

+6.9%

39


Stronger Base Contribution in H1 2017

G&S Quarterly Growth Analysis

9 H1 17 comparable growth based on 2016 adjusted sales

+29% +31% +14% START-UPS in H1 17

40


H1 2017 G&S Revenue Breakdown by Region

AMERICAS

€4.3bn

EUROPE

€3.4bn

ASIA-PACIFIC

€2.0bn

Large Industries Electronics Healthcare Industrial Merchant

€9,978m

41


Q2 - Solid LI, IM Driving Growth

LARGE INDUSTRIES

H1 2017

€2,694m

INDUSTRIAL MERCHANT

H1 2017

€4,757m

Strong volumes in all regions

• High global demand for air gases and hydrogen

• Limited contribution from start-ups & ramp-ups

• Numerous maintenance turnarounds

Continued improvement in IM

• Recovering in North America, Europe and Asia

• Most end markets improving

• Price firming


As published

+60%

42


Q2 - Sound HC, Positive Momentum in EL

Strong growth in developing economies

• Solid underlying activity

• Working days impact in Europe

• Low M&A

Robust Carrier Gases and

Advanced Materials

• 3 start-ups in Carrier Gases

• Advanced Materials double-digit growth

• Excluding E&I, growth close to +10%

HEALTHCARE H1 2017

ELECTRONICS H1 2017

€837m €1,690m


+17%

As published

43


Order Intake Improving again in E&C

Group and Third Party Orders

E&C GMT

• Group projects

• Energy and Chemical projects for 3rd parties (China, Korea)

• Space equipment (mainly Ariane 6)

• Maritime tanks

• Biogas purification, hydrogen recharging stations

44


Industrial Merchant Pricing


45


Consolidated P&L

(1) H1 2016 Basic earnings per share restated for the impact of the preferential subscription rights allocated to shareholders as part of the capital increase 46


Consolidated Balance Sheet Simplified - In €m

* Including fair value of derivatives

47


Cash Flow Statement

* PPE: Property, plant and equipment. (a) The cash flow statement for the 1st half 2016 has been restated in accordance with IAS 8 in order to include the restated net cost of financial indebtedness from the Airgas acquisition.

48


36%

27%9%

28%

Africa Middle-East

Americas

Europe

Asia-Pacific

Gas & Services Industrial Capex by Geography

G&S H1 2017 capex(1) G&S capex(1) / sales

(1) Gross industrial investments.

€1.0bn

49


Investment Cycle – Definitions

● Investment opportunities at end of the period

– Investment opportunities under consideration by the Group for decision within 12 months.

– Industrial projects with investment value > €5m for Large Industries and > €3m for other business lines.

– Includes asset replacements or efficiency projects. Excludes maintenance and safety.

● Investment backlog at end of the period

– Cumulated industrial investment value of projects decided but not yet started.

– Industrial projects with value > €10m, including asset replacements or efficiency projects, excluding maintenance and safety.

●Sales backlog

– Cumulated expected sales per year generated by the current investment backlog after full ramp-up.

●Decisions of the period

– Cumulated value of industrial and financial investment decisions.

– Industrial, growth and non-growth projects including asset replacements, efficiency, maintenance and safety.

– Financial decisions (acquisitions).

50

The world leader in gases, technologies and services for Industry and Health 7 September 2017 Credit Investor 51

For further information, please contact:

Investor Relations

Aude Rodriguez + 33 (0)1 40 62 57 08

Louis Laffont + 33 (0)1 40 62 57 18

Jérôme Zaman + 33 (0)1 40 62 59 38

Joseph Marczely + 1 610 263 8277

Group Financing and Rating

Jacques Molgo + 33 (0)1 40 62 57 75

Aude Revel + 33 (0)1 40 62 56 64

Aurélien de Chomereau + 33 (0)1 40 62 58 25

www.airliquide.com Follow us on Twitter @AirLiquideGroup

L’Air Liquide S.A.

Corporation for the study and application of processes developed by Georges Claude

with registered capital of 2,132,891,915.00 euros

Corporate Headquarters:

75, Quai d’Orsay

75321 Paris Cedex 07

Tel : +33 (0)1 40 62 55 55

RCS Paris 552 096 281

credit investor presentation - air liquide...2017/09/06 · • in 2016, the committed amount of...

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